American Eagle to revisit divestiture plan post-bankruptcy

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American Eagle would "likely" resume a divestiture from parent AMR if both emerge from bankruptcy intact, but with a new focus on fleet renewal and a lower cost structure, Dan Garton, chief executive of AMR's regional airline, told reporters today.

Speaking at the Regional Airline Association's convention, Garton estimated American Eagle was only 60 to 90 days away from completing a divestiture to AMR shareholders when the parent company filed for bankruptcy protection.

"Once we come out of bankruptcy, assuming we've been successful as I've described, the same motivation we had to pursue a divestiture last November will be there again, and we'll evaluate it and likely pursue it again," said Garton.

American Eagle also would follow much of the same business plan as before the bankruptcy filing, but with two exceptions. First, AMR has outlined plans to replace 50-seat regional jets with larger aircraft as part of its bankruptcy restructuring. Scope clause restrictions in labour contracts that AMR is attempting to reject have prevented acquisitions of larger aircraft.

"There will be some element of fleet revitalization in our plan if this all goes as I've described," Garton said.

Secondly, American Eagle would enter a divestiture with a smaller base of fixed costs as a result of the bankruptcy restructuring, he said.

"We'll go into independence with lower costs [on] day one while our original business plan had a significant part of trying to achieve lower costs over several years," said Garton. "I guess if there was an advantage to bankruptcy, that's it."

Otherwise, Garton outlined a divested business plan for American Eagle that is largely similar to the strategy proposed last year.

"We will operate as much of the flying for American Airlines as we can. But we know American wants to diversify their sources of regional feed. So we would go into life with a contract with American Airlines for a portion of the regional feed. We would then try to grow as quickly and as successfully as we could doing flying for others at the same time we're trying to pursue [third-party] ground handling," Garton said.

Garton did not address the ongoing attempt by US Airways to acquire American Airlines, a move that has uncertain implications for American Eagle.